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With Friday’s 3% stock rally, Maruti emerged as the eighth most valued entity

Maruti Suzuki, the country’s largest car maker, is now valued higher by the market than the combined one of the two other listed car makers, Tata Motors and Mahindra & Mahindra, for the first time.

The Suzuki-owned car maker’s market capitalisation (m-cap) hit Rs 2.25 lakh crore on Friday as its stock closed at a new high of Rs 7,451 on the BSE. The combined m-cap of Tata Motors (Rs 1.348 lakh crore) and M&M (Rs 88,599 crore) amounted to Rs 2.23 lakh crore at Friday’s close.

With Friday’s three per cent rally, Maruti has also emerged as the eighth most valued entity among those listed. It is now ahead of information technology major Infosys (Rs 2.17 lakh crore) and energy giant Oil and Natural Gas Corporation (ONGC) (Rs 2.17 lakh crore).

A month earlier, it had ranked 10th. A 12 per cent rally in the stock over four weeks has enabled Maruti to overtake Infosys, ONGC and Indian Oil, and, is valued higher than parent Suzuki.

The stock has surged 79 per cent in 12 months on improving sales, profit and rising volumes. The firm has to a large extent managed to shed the image of a small car maker and marked a strong presence in bigger and premium ones (through its Ciaz, Brezza and S Cross); this also helped improved the average realisation. Analysts remain bullish on the scrip and continue to give a ‘Buy’ call.

The profit in 2016-17 was a record at Rs 7,337 crore, about 37 per cent higher than the previous year. Year after year, it has shown a volume growth higher than the average industry performance. In FY17, its volumes grew almost 10 per cent, to 1.56 million vehicles, giving it a 47.3 per cent share in the world's fifth biggest car market.

In the first two months (April-May) of the current financial year, sales (including export) have grown about 15 per cent to 288,177 units. The company has aggressive plans to reach a volume of two million units a year by 2020.

For long having a capacity constraint, visible in the months of waiting for delivery of its Baleno and Brezza, it has seen some easing after Suzuki inaugurated its Gujarat factory in February. Maruti is again confident of a double-digit growth in volume and expects to do better than the industry, managing director and chief executive officer Kenichi Ayukawa said recently.

Tata Motors has a single-digit market share in the domestic passenger vehicle (PV) market, while being the largest in commercial vehicles. Its stock price has slipped 22 per cent from the 52-week high of Rs 598 in September last year, to Rs 467 now. It is nowhere close to the all-time high of Rs 606 seen in February 2015. The standalone (domestic) business has been making losses for some quarters, while it has been profitable at a consolidated level, due to its Jaguar Land Rover arm abroad.

The going has not been great for M&M either. Its utility vehicle dominance is getting challenged by newer entrants Maruti and Hyundai. The company is third biggest in the domestic PV segment but has struggled to grow the volumes here since demonetisation was announced in November last year. Its PV sales posted flat growth in 2016-17 and started the current financial year on a weak note. The impact here has, however, been offset by an expanding farm equipment business (tractors). Its stock hit a new high of Rs 1,509 in August 2016 and closed at Rs 1,426 on Friday.